<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 24, 2000
REGISTRATION NO. 333-31102
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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ePLUS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 54-1817218
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
400 HERNDON PARKWAY
HERNDON, VIRGINIA 20170
(703) 834-5710
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF THE
COMPANY'S PRINCIPAL EXECUTIVE OFFICES)
STEVEN J. MENCARINI
CHIEF FINANCIAL OFFICER
ePLUS INC.
400 HERNDON PARKWAY
HERNDON, VIRGINIA 20170
(703) 834-5710
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
JONATHAN H. TALCOTT RICHARD J. SANDLER
ALSTON & BIRD LLP DAVIS POLK & WARDWELL
601 PENNSYLVANIA AVENUE, N.W. 450 LEXINGTON AVENUE
NORTH BUILDING, 11TH FLOOR NEW YORK, NEW YORK 10017
WASHINGTON, D.C. 20004 PHONE: (212) 450-4000
PHONE: (202) 756-3300 FACSIMILE: (212) 450-4800
FACSIMILE: (202) 756-3333
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effectiveness of the Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ________________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ] ________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the Registrant in connection with the issuance
and distribution of the securities being registered are as follows:
<TABLE>
<S> <C>
SEC filing fee.............................................. $ 22,296
NASD filing fee............................................. 8,945
Nasdaq listing fee.......................................... 17,500
Blue sky fees and expenses.................................. 10,000
Transfer agent expenses and fees............................ 1,500
Printing and engraving...................................... 70,000
Accounting fees and expenses................................ 125,000
Legal fees and expenses..................................... 200,000
Liability insurance premium................................. 100,000
Miscellaneous expenses...................................... 5,000
Total............................................. $560,241
</TABLE>
All of the fees and expenses set forth above will be paid by ePlus. Other than
the SEC filing fee and the NASD filing fee, all fees and expenses are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Ninth Article of the Certificate of Incorporation of the Registrant
provides:
"No person shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director; provided, however, that the foregoing shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit."
The Tenth Article of the Certificate of Incorporation of the Registrant
provides:
"The Corporation shall indemnify, in the manner and to the fullest
extent permitted by the Delaware General Corporation Law (and in the case
of any amendment thereto, to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), any person (or the estate of any person) who is or was a party
to, or is threatened to be made a party to, any threatened, pending or
completed action, suit or proceeding, whether or not by or in the right of
the Corporation, and whether civil, criminal, administrative, investigative
or otherwise, by reason of the fact that such person is or was a director
or officer of the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation, partnership,
joint venture, trust or other enterprise including service with respect to
an employee benefit plan. The Corporation may, to the fullest extent
permitted by the Delaware General Corporation Law, purchase and maintain
insurance on behalf of any such person against any liability which may be
asserted against such person. To the fullest extent permitted by the
Delaware General Corporation Law, the indemnification provided herein may
include expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement and any such expenses may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the person seeking
indemnification to repay such amounts if it is ultimately determined that
he or she is not entitled to be indemnified. The indemnification provided
herein shall not be deemed to limit the right of the Corporation to
indemnify any other person for any such expenses to the fullest extent
permitted by the Delaware General Corporation Law, nor shall it be deemed
exclusive of any other rights to which any person seeking indemnification
from the Corporation may be entitled under any agreement, the Corporation's
Bylaws, vote of stockholders or disinterested directors, or otherwise, both
as to action in such person's official capacity and as to action in another
capacity while holding such office. The Corporation may, but only to the
extent that the Board of Directors may (but shall not be obligated to)
authorize from time to time, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article Tenth as they apply to the
indemnification and advancement of expenses of directors and officers of
the Corporation."
II-1
<PAGE> 3
Section 145 of the Delaware General Corporation Law empowers the Registrant to
indemnify its officers and directors under certain circumstances. The pertinent
provisions of that statute read as follows:
"(a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by a majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (2) if there are no
such directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final deposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
II-2
<PAGE> 4
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employer or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees)."
The Registrant has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a
director or officer whose actions in his capacity result in liability, or to the
Registrant, in the event it has indemnified the director or officer.
The Registrant has entered into separate but identical indemnification
agreements with each director and executive officer and the Registrant expects
to enter into indemnification agreements with persons who become directors or
executive officers in the future. The indemnification agreements provide that
the Registrant will indemnify the director or officer against any expenses or
liabilities in connection with any proceeding in which such Indemnitee may be
involved because such indemnitee is or was a director or officer of the
Registrant or because of any action such indemnitee took or omitted to take
while acting as a officer or director of the Registrant. But such indemnity will
only apply if:
(1) the indemnitee was acting in good faith and in a manner the
indemnitee reasonably believed to be in the best interests of the
Registrant;
(2) with respect to any criminal action, the indemnitee must have had
no reasonable cause to believe his conduct was unlawful;
(3) the claim was not made to recover profits made by the indemnitee
in violation of Section 16(b) of the Exchange Act;
(4) the claim was not initiated by the indemnitee;
(5) the claim was not covered by applicable insurance; or
(6) the claim was not for an act or omission of a director from which
a director may not be relieved of liability under Section 103(b)(7) of the
Delaware General Corporation Law.
Each indemnitee has undertaken to repay the Registrant for any costs or expenses
the Registrant will pay if it is ultimately determined that the indemnitee is
not entitled to indemnification under the indemnification agreements.
II-3
<PAGE> 5
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement
4.1 Specimen Certificate for the Common Stock of ePlus inc.(1)
5.1 Opinion of Alston & Bird LLP(1)
23.1 Consent of Alston & Bird LLP (included in Exhibit 5.1)(1)
23.2 Consent of Deloitte & Touche LLP (1)
23.3 Consent of KPMG LLP (1)
24.1 Power of Attorney relating to subsequent amendments(1)
</TABLE>
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(1) Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
maybe permitted to directors, officers or controlling persons pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the Registration pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this Registration Statement as of the time it was declared
effective.
(2) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
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<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused Amendment No. 2 to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Herndon, Virginia on the 23(rd) day of March, 2000.
The Registrant:
ePLUS INC.
By: /s/ PHILLIP G. NORTON
---------------------------------------
Phillip G. Norton
Chairman of the Board,
President, and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Amendment No. 2 to
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE AND TITLE DATE
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/s/ PHILLIP G. NORTON March 23, 2000
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Phillip G. Norton
Chairman of the Board, President, and
Chief Executive Officer
* March 23, 2000
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Steven J. Mencarini
Senior Vice President, Chief Financial Officer and
Senior Accounting Officer
* March 23, 2000
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Bruce M. Bowen
Director and Executive Vice-President
* March 23, 2000
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Terrence O'Donnell
Director
* March 23, 2000
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Carl J. Rickertsen
Director
* March 23, 2000
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C. Thomas Faulders, III
Director
* March 23, 2000
- --------------------------------------------------------
Dr. Paul G. Stern
Director
*By: /s/ PHILLIP G. NORTON March 23, 2000
---------------------------------------------------
Phillip G. Norton
Attorney-in-Fact
</TABLE>
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<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
1.1 Form of Underwriting Agreement
4.1 Specimen Certificate for the Common Stock of ePlus inc. (1)
5.1 Opinion of Alston & Bird LLP (1)
23.1 Consent of Alston & Bird LLP (included in Exhibit 5.1) (1)
23.2 Consent of Deloitte & Touche LLP (1)
23.3 Consent of KPMG LLP (1)
24.1 Power of Attorney relating to subsequent amendments (1)
</TABLE>
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(1) Previously filed.
<PAGE> 1
EXHIBIT 1.1
UNDERWRITING AGREEMENT
EPLUS INC.
2,500,000 SHARES OF COMMON STOCK (PAR VALUE $0.01 PER SHARE)
Underwriting Agreement
March ______, 2000
J.P. Morgan Securities Inc.
First Union Securities, Inc.
Friedman, Billings, Ramsey & Co., Inc.
U.S. Bancorp Piper Jaffray Inc.
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
ePlus inc., a Delaware corporation (the "COMPANY"), proposes to issue
and sell to the several Underwriters listed in Schedule I hereto (the
"UNDERWRITERS"), for whom you are acting as representatives (the
"REPRESENTATIVES") an aggregate of 2,000,000 shares of Common Stock, par value
$0.01 per share, of the Company and the stockholders of the Company named in
Schedule II hereto (the "NON-MANAGEMENT SELLING STOCKHOLDERS") propose to sell
to the Underwriters an aggregate of 500,000 shares. For the sole purpose of
covering over-allotments, at the election of the Underwriters, the
Non-Management Selling Stockholders and the stockholders of the Company named
in Schedule III hereto (the "MANAGEMENT SELLING STOCKHOLDERS" and together with
the Non-Management Selling Stockholders, the "SELLING STOCKHOLDERS") propose to
sell up to 375,000 additional shares of Common Stock. The 2,500,000 shares to
be sold by the Company and the Non-Management Selling Stockholders are herein
referred to as the "UNDERWRITTEN SHARES" and the 375,000 additional shares to
be sold by the Selling Stockholders are herein referred to as the "OPTION
SHARES". The Underwritten Shares and the Option Shares are collectively herein
referred to as the "SHARES". The shares of Common Stock of the Company to be
outstanding after giving effect to the sale of the Shares are herein referred
to as the "STOCK."
The Company has prepared and filed with the Securities and Exchange
Commission (the "COMMISSION") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "SECURITIES ACT"), a registration
<PAGE> 2
statement, including a prospectus, relating to the Shares. The registration
statement as amended at the time when it becomes effective including
information (if any) deemed to be part of the registration statement at the
time of effectiveness pursuant to Rule 430A under the Securities Act, is
referred to in this Agreement as the "REGISTRATION Statement", and the
prospectus in the form first used to confirm sales of Shares is referred to in
this Agreement as the "PROSPECTUS". If the Company has filed an abbreviated
registration statement pursuant to Rule 462(b) under the Securities Act (the
"RULE 462 REGISTRATION Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462 Registration
Statement. Any reference in this Agreement to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act, as of the effective date of the Registration
Statement or the date of such preliminary prospectus or the Prospectus, as the
case may be, and any reference to "amend", "amendment" or "supplement" with
respect to the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include any documents filed after
such date under the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission thereunder (collectively, the "EXCHANGE ACT")
that are deemed to be incorporated by reference therein.
The Company and each of the Selling Stockholders hereby agree with the
Underwriters as follows:
1. The Company and each of the Non-Management Selling Stockholders
agree, severally and not jointly, to sell the Underwritten Shares to the
several Underwriters as hereinafter provided, and each Underwriter, upon the
basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees to purchase, severally and not
jointly, from the Company and each of the Non-Management Selling Stockholders
at a purchase price per share of $[______] (the "PURCHASE PRICE") the number of
Underwritten Shares (to be adjusted by you so as to eliminate fractional
shares) determined by multiplying the aggregate number of Underwritten Shares
to be sold by the Company and each of the Non-Management Selling Stockholders
as set forth opposite their respective names in Schedule II hereto by a
fraction, the numerator of which is the aggregate number of Underwritten Shares
to be purchased by such Underwriter as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the aggregate
number of Underwritten Shares to be purchased by all the Underwriters from the
Company and all the Non-Management Selling Stockholders hereunder.
In addition, each of the Non-Management Selling Stockholders, as and
to the extent indicated in Schedule II hereto and each of the Management
Selling Stockholders as and to the extent set forth in Schedule III hereto,
agrees to sell the
2
<PAGE> 3
Option Shares to the several Underwriters and the Underwriters shall have the
option to purchase at their election up to 375,000 Option Shares for the sole
purpose of covering over-allotments in the sale of the Underwritten Shares. The
Underwriters on the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, shall have the
option to purchase, severally and not jointly, from each of the Selling
Stockholders at the Purchase Price that portion of the number of Option Shares
as to which such election shall have been exercised (to be adjusted by you so
as to eliminate fractional shares) determined by multiplying such number of
Option Shares by a fraction the numerator of which is the maximum number of
Option Shares which such Underwriter is entitled to purchase and the
denominator of which is the maximum number of Option Shares that all of the
Underwriters are entitled to purchase hereunder, for the sole purpose of
covering over-allotments (if any) in the sale of the Underwritten Shares by the
several Underwriters. Any such election to purchase Option Shares shall be
allocated among the Selling Stockholders in proportion to the maximum number of
Option Shares to be sold by each Selling Stockholder as set forth in Schedule
II and Schedule III hereto.
The Underwriters may exercise the option to purchase the Option Shares
at any time (but not more than once) on or before the thirtieth day following
the date of this Agreement, by written notice from the Underwriters to the
Company and the Attorneys-in-Fact (as defined below). Such notice shall set
forth the aggregate number of Option Shares as to which the option is being
exercised and the date and time when the Option Shares are to be delivered and
paid for which may be the same date and time as the Closing Date (as
hereinafter defined) but shall not be earlier than the Closing Date nor later
than the tenth full Business Day (as hereinafter defined) after the date of
such notice (unless such time and date are postponed in accordance with the
provisions of Section 9 hereof). Any such notice shall be given at least two
Business Days prior to the date and time of delivery specified therein.
2. The Company and the Selling Stockholders understand that the
Underwriters intend (i) to make a public offering of the Shares as soon after
(A) the Registration Statement has become effective and (B) the parties hereto
have executed and delivered this Agreement, as in the judgment of the
Underwriters is advisable and (ii) initially to offer the Shares upon the terms
set forth in the Prospectus.
3. Payment for the Shares shall be made by wire transfer in
immediately available funds to the account specified to the Underwriters by the
Company with regard to payment to the Company, by the Attorneys-in-Fact (as
defined below) with regard to payment to the Management Selling Stockholders,
by an executive officer of TC Equity Partners, LLC, the general partner of
Thayer Equity Investors III, LP, the managing member of TC Plus, LLC with
regard to payment to TC Plus, LLC and by an executive officer of Centura Banks,
Inc. with regard to
3
<PAGE> 4
payment to Centura Banks, Inc., in the case of the Underwritten Shares, on
___________, 2000, or at such other time on the same or such other date, not
later than the fifth Business Day thereafter, as the Underwriters and the
Company and Attorneys-in-Fact may agree upon in writing or, in the case of the
Option Shares, on the date and time specified by the Underwriters in the
written notice of the Underwriters' election to purchase such Option Shares.
The time and date of such payment for the Underwritten Shares is referred to
herein as the "CLOSING DATE" and the time and date for such payment for the
Option Shares, if other than the Closing Date, are herein referred to as the
"ADDITIONAL CLOSING DATE". As used herein, the term "BUSINESS DAY" means any
day other than a day on which banks are required to be closed in New York City.
Payment for the Shares to be purchased on the Closing Date or the
Additional Closing Date, as the case may be, shall be made against delivery to
the Underwriters for the respective accounts of the several Underwriters of the
Shares to be purchased on such date registered in such names and in such
denominations as the Underwriters shall request in writing not later than two
full Business Days prior to the Closing Date or the Additional Closing Date, as
the case may be, with any transfer taxes payable in connection with the
transfer to the Underwriters of the Shares duly paid by the Company or the
Selling Stockholders, as the case may be. The certificates for the Shares will
be made available for inspection and packaging by the Underwriters at the
office of J.P. Morgan Securities Inc. set forth above not later than 1:00 P.M.,
New York City time, on the Business Day prior to the Closing Date or the
Additional Closing Date, as the case may be.
4. (a) The Company represents and warrants to each Underwriter and
the Selling Stockholders that:
(i) no order preventing or suspending the use of any
preliminary prospectus has been issued by the Commission, and each
preliminary prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed
in all material respects with the Securities Act, and did not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter or any Selling
Stockholder furnished to the Company in writing by such Underwriter
through the Representatives or by such Selling Stockholder, as
applicable, expressly for use therein;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been
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<PAGE> 5
instituted or, to the knowledge of the Company, threatened by the
Commission; and the Registration Statement and Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) comply, or will comply, as the case may be, in
all material respects with the Securities Act and do not and will not,
as of the applicable effective date as to the Registration Statement
and any amendment thereto and as of the date of the Prospectus and any
amendment or supplement thereto, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and the Prospectus, as amended or supplemented, if applicable, at the
Closing Date or Additional Closing Date, as the case may be, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; except
that the foregoing representations and warranties shall not apply to
statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
relating to any Underwriter or any Selling Stockholder furnished to
the Company in writing by such Underwriter through the Representatives
or by such Selling Stockholder, as applicable, expressly for use
therein;
(iii) the documents incorporated by reference in the
Prospectus, when they were filed with the Commission conformed in all
material respects to the requirements of the Securities Exchange Act
of 1934, as amended, and the rules and regulation of the Commission
thereunder (collectively, the "EXCHANGE ACT"), and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading;
and any further documents so filed and incorporated by reference in
the Prospectus, when such documents are filed with the Commission,
will conform in all material respects to the requirements of the
Exchange Act, and will not contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(iv) the financial statements of the Company, and the related
notes thereto, included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates indicated and the results of their
operations and changes in their consolidated cash flows for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis, and the supporting schedules
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<PAGE> 6
included or incorporated by reference in the Registration Statement
present fairly the information required to be stated therein; and the
pro forma financial information, and the related notes thereto,
included and incorporated by reference in the Registration Statement
and the Prospectus, has been prepared in accordance with the
applicable requirements of the Securities Act and the Exchange Act, as
applicable and is based upon good faith estimates and assumptions
believed by the Company to be reasonable;
(v) there has not been any change in the capital stock or
long-term debt of the Company or any of its subsidiaries, or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
business, prospects, management, financial position, stockholders'
equity or results of operations of the Company and its subsidiaries,
taken as a whole (a "MATERIAL ADVERSE CHANGE"), otherwise than as set
forth or contemplated in the Prospectus (as it stood at the time of
execution and delivery of this Agreement); and except as set forth or
contemplated in the Prospectus (as it stood at the time of execution
and delivery of this Agreement) neither the Company nor any of its
subsidiaries has entered into any transaction or agreement (whether or
not in the ordinary course of business) material to the Company and
its subsidiaries taken as a whole;
(vi) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Delaware, with power and authority to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to
require such qualification, other than where the failure to be so
qualified or in good standing would not have a material adverse effect
on the business, prospects, financial condition, stockholders' equity
or results of operations of the Company and its subsidiaries, taken as
a whole (a "MATERIAL ADVERSE EFFECT");
(vii) each of the Company's subsidiaries has been duly
incorporated and is validly existing as a corporation under the laws
of its jurisdiction of incorporation, with power and authority to own
its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, other than where
the failure to be so qualified or in good standing would not have a
Material Adverse Effect and all the outstanding shares of capital
stock of each subsidiary of the Company have been duly
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<PAGE> 7
authorized and validly issued, are fully-paid and non-assessable, and
are owned by the Company, directly or indirectly, free and clear of
all liens, encumbrances, security interests and claims, except that
such subsidiary shares are pledged as security to First Union National
Bank Corporate Trust for amounts outstanding under the Company's
working capital facility;
(viii) this Agreement has been duly authorized, executed and
delivered by the Company;
(ix) the Company has an authorized capitalization as set
forth in the Prospectus and such authorized capital stock conforms as
to legal matters to the description thereof set forth in the
Prospectus, and all of the outstanding shares of capital stock of the
Company (including the Shares to be sold by the Selling Stockholders)
have been duly authorized and validly issued, are fully-paid and
non-assessable and are not subject to any pre-emptive or similar
rights; and, except as expressly described by the Prospectus, there
are no outstanding rights (including, without limitation, pre-emptive
rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other equity
interest in the Company or any of its subsidiaries, or any contract,
commitment, agreement, understanding or arrangement of any kind
relating to the issuance of any capital stock of the Company or any
such subsidiary, any such convertible or exchangeable securities or
any such rights, warrants or options;
(x) the Shares to be issued and sold by the Company have
been duly authorized, and, when issued and delivered to and paid for
by the Underwriters in accordance with the terms of this Agreement,
will be duly issued and will be fully paid and non-assessable and will
conform to the descriptions thereof in the Prospectus; and the
issuance of the Shares will not be subject to any preemptive or
similar rights;
(xi) The stock purchase warrant dated as of October 23, 1998
(the "WARRANT") has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms; the Warrant has been
exercised in accordance with its terms and in accordance with the
terms of the agreement dated as of February 25, 2000 (the "WARRANT
AGREEMENT"); the shares issued upon the exercise of the Warrant have
been duly authorized and validly issued, are fully paid and
non-assessable and are not subject to any preemptive or similar
rights.
(xii) The warrant dated as of March 3, 2000 granted to PSINet
Ventures, Inc. (the "PSINET WARRANT") has been duly authorized,
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<PAGE> 8
executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable in accordance with its
terms; the shares issuable upon the exercise of the PSINet Warrant
have been duly authorized and reserved for issuance, and upon the
exercise of the PSINet Warrant in accordance with its terms, such
shares will be fully paid and non-assessable and will not be subject
to any preemptive or similar rights.
(xiii) neither the Company nor any of its subsidiaries is, or
with the giving of notice or lapse of time or both would be, in
violation of or in default under, its Certificate of Incorporation or
By-Laws or any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them or any of their
respective properties is bound, except for violations and defaults
which individually or in the aggregate would not have a Material
Adverse Effect; the issuance and sale of the Shares to be sold by the
Company hereunder, the issuance of the shares issued upon the exercise
of the Warrant, the issuance by the Company of the Shares to be issued
upon the exercise of the Stock Options (as defined herein) and the
performance by the Company of its obligations under this Agreement and
the consummation of the transactions contemplated herein will not
conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor will
any such action result in any violation of the provisions of the
Certificate of Incorporation or the By-Laws of the Company or any
applicable law or statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company, its subsidiaries or any of their respective properties; and
no consent, approval, authorization, order, license, registration or
qualification of or with any such court or governmental agency or body
is required for the issuance and sale of the Shares to be sold by the
Company hereunder, the issuance of the shares issued upon the exercise
of the Warrant, the issuance by the Company of the Shares to be issued
upon the exercise of the Stock Options or the consummation by the
Company of the transactions contemplated by this Agreement, except
such consents, approvals, authorizations, orders, licenses,
registrations or qualifications as have been obtained under the
Securities Act and as may be required under state securities or Blue
Sky Laws in connection with the purchase and distribution of the
Shares by the Underwriters;
(xiv) there are no legal or governmental investigations,
actions, suits or proceedings pending or, to the knowledge of the
Company, threatened or contemplated against the Company or any of its
subsidiaries
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<PAGE> 9
or any of their respective properties or to which the Company or any
of its subsidiaries is or may be a party or to which any property of
the Company or any of its subsidiaries is or may be the subject which,
if determined adversely to the Company or any of its subsidiaries,
could individually or in the aggregate have, a Material Adverse
Effect; and there are no statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required;
(xv) the Company and its subsidiaries have good and
marketable title in fee simple to all items of real property and good
and marketable title to all personal property owned by them, in each
case free and clear of all liens, encumbrances and defects except such
as are described or referred to in the Prospectus or such as do not
materially affect the value of such property and do not interfere with
the use made or proposed to be made of such property by the Company
and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under
valid, existing and enforceable leases with such exceptions as are not
material and do not interfere with the use made or proposed to be made
of such property and buildings by the Company or its subsidiaries;
(xvi) no relationship, direct or indirect, exists between or
among the Company or any or its subsidiaries on the one hand, and the
directors, officers, stockholders, customers or suppliers of the
Company or any of its subsidiaries on the other hand, which is
required by the Securities Act to be described in the Registration
Statement and the Prospectus which is not so described;
(xvii) except as described in the Prospectus, no person has
the right to require the Company to register any securities for
offering and sale under the Securities Act by reason of the filing of
the Registration Statement with the Commission or the issuance and
sale of the Shares to be sold by the Company hereunder or, to the best
knowledge of the Company, the sale of the Shares to be sold by the
Selling Stockholders hereunder;
(xviii) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company"
defined in the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT");
(xix) Deloitte and Touche LLP, who have certified certain
financial statements of the Company, and its subsidiaries and KPMG,
LLP who have certified certain financial statements of CLG, Inc., are
each independent public accountants as required by the Securities Act;
9
<PAGE> 10
(xx) the Company and its subsidiaries have filed all
federal, state, local and foreign tax returns which have been required
to be filed and have paid all taxes shown thereon and all assessments
received by them or any of them to the extent that such taxes have
become due and are not being contested in good faith, except where the
failure to so comply would not, singly or in the aggregate, result in
a Material Adverse Effect;
(xxi) the Company has not taken nor will it take, directly or
indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the
price of the Common Stock;
(xxii) The unissued Shares issuable upon the exercise of
options (the "STOCK OPTIONS") to be exercised by three of the Selling
Stockholders, Phillip G. Norton, Steven J. Mencarini and Kleyton L.
Parkhurst (the "STOCK OPTIONHOLDERS"), have been duly and validly
authorized and reserved for issuance, and at the time of delivery to
the Underwriters with respect to such Shares, such Shares will be
issued and delivered in accordance with the provisions of the Stock
Option Agreements between the Company and such Selling Stockholders
pursuant to which such Stock Options were granted (the "STOCK OPTION
AGREEMENTS") and will be duly and validly issued, fully paid and
non-assessable and will conform to the description thereof in the
Prospectus;
(xxiii) the Stock Options were duly authorized and issued
pursuant to the Stock Option Agreements and constitute valid and
binding obligations of the Company and the Stock Optionholders are
entitled to the benefits provided by the Stock Option Agreements; the
Stock Option Agreements were duly authorized, executed and delivered
and constitute valid and binding instruments enforceable in accordance
with their terms subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(xxiv) each of the Company and its subsidiaries owns,
possesses or has obtained all licenses, permits, certificates,
consents, orders, approvals and other authorizations from, and has
made all declarations and filings with, all federal, state, local and
other governmental authorities, all self-regulatory organizations and
all courts and other tribunals necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
conducted as of the date hereof, except where the failure to so obtain
such licenses, permits, certificates, consents, orders, approvals and
other authorizations or make such declarations and filings would not
have a Material Adverse Effect; and neither the Company nor any such
subsidiary has received any actual notice of any proceeding relating
to
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<PAGE> 11
revocation or modification of any such license, permit, certificate,
consent, order, approval or other authorization, except for such
proceedings which would not have a Material Adverse Effect; and each
of the Company and its subsidiaries is in compliance with all laws and
regulations relating to the conduct of its business as conducted as of
the date hereof, except where the failure to so comply would not have
a Material Adverse Effect.
(xxv) the Company and its subsidiaries (A) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), (B) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (C) are
in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a Material Adverse Effect;
(xxvi) in the ordinary course of its business, the Company
conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and its
subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of such
review, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, have a
Material Adverse Effect;
(xxvii) the Company owns, possesses, or has an irrevocable
right to use all patents, patent applications, trademarks, trademark
applications, service marks, service mark applications, trade names,
copyrights, licenses, inventions, trade secrets, technology and
know-how (collectively, "INTELLECTUAL PROPERTY RIGHTS") currently
employed by it in connection with and material to its business as
described in the Prospectus; the Company is not aware of any rights of
third parties to any such Intellectual Property Rights. There are no
enforceable United States or foreign patents known to the Company
which the Company believes to be infringed by its present activities
or which the Company believes would preclude the pursuit of its
business as described in the Prospectus to any material extent; the
Company is not aware of any infringement by third parties of any such
Intellectual Property Rights which would have a Material Adverse
Effect;
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<PAGE> 12
and, there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim challenging the validity or scope of
the Company's rights in or to any such Intellectual Property Rights;
and, there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others that the Company is
infringing or otherwise violating intellectual property rights of
others.
(xxviii) Each of the Amended and Restated Stockholders
Agreement, the Warrant Agreement and the Stock Purchase Agreement
dated as of October 23, 1998 as modified by the Warrant Agreement (the
"MODIFIED STOCK PURCHASE AGREEMENT") has been duly authorized,
executed and delivered by each of the parties thereto, and constitutes
a valid and binding obligation of each such party and is enforceable
against each such party in accordance with its terms.
(b) Each of the Selling Stockholders severally represents and
warrants to, and agrees with, each of the Underwriters that:
(i) all consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder
of this Agreement and the Power of Attorney (the "POWER OF ATTORNEY")
and the Custody Agreement (the "CUSTODY AGREEMENT") hereinafter
referred to, and for the sale and delivery of the Shares to be sold by
such Selling Stockholder hereunder, have been obtained; and such
Selling Stockholder has full right, power and authority to enter into
this Agreement, the Power of Attorney and the Custody Agreement and to
sell, assign, transfer and deliver the Shares to be sold by such
Selling Stockholder hereunder; this Agreement, the Power of Attorney
and the Custody Agreement have each been duly authorized, executed and
delivered by such Selling Stockholder;
(ii) the sale of the Shares to be sold by such Selling
Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement, the Power of Attorney
and the Custody Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any statute, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which
such Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which any of the property or assets of such
Selling Stockholder is subject, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or
By-laws of such Selling Stockholder if such Selling Stockholder is a
corporation or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over such
Selling Stockholder or the property of such Selling Stockholder;
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<PAGE> 13
(iii) such Selling Stockholder has good and valid title to the
Shares to be sold at the Closing Date or Additional Closing Date, as
the case may be, by such Selling Stockholder hereunder (other than the
Shares to be issued upon the exercise of Stock Options), free and
clear of all liens, encumbrances, equities or adverse claims; such
Selling Stockholder will have, immediately prior to the Closing Date
or Additional Closing Date, as the case may be, assuming due issuance
of any Shares to be issued upon the exercise of Stock Options, good
and valid title to the Shares to be sold at the Closing Date or
Additional Closing Date, as the case may be, by such Selling
Stockholder, free and clear of all liens, encumbrances, equities or
adverse claims;
(iv) such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares; and
(v) such Selling Stockholder has reviewed the information
relating to such Selling Stockholder contained in the Registration
Statement and the Prospectus and the information relating to such
Selling Stockholder in the Registration Statement and the Prospectus
does not contain any untrue statement of a material fact relating to
the Selling Stockholder or omit to state any fact required to be
stated therein or necessary to make the statements therein relating to
such Selling Stockholder not misleading.
Each of the Selling Stockholders represents and warrants that
certificates in negotiable form representing all of the Shares to be sold by
such Selling Stockholders hereunder other than any such Shares to be issued
upon the exercise of Stock Options, have been placed in custody under a Custody
Agreement relating to such Shares, and each of the Selling Stockholders who is
selling Shares upon the exercise of Stock Options represents and warrants that
duly completed and executed irrevocable exercise notices in respect of Stock
Options, in the forms specified by the relevant Stock Option Agreement, with
respect to all of the Shares to be sold by such Selling Stockholders hereunder
have been placed in custody under a Custody Agreement relating to such Shares,
in each case, in the form heretofore furnished to you, duly executed and
delivered by such Selling Stockholder to First Union National Bank Corporate
Trust, as custodian (the "CUSTODIAN"), and that such Selling Stockholder has
duly executed and delivered Powers of Attorney, in the form heretofore
furnished to you, appointing Phillip G. Norton and Kleyton L. Parkhurst, as
such Selling Stockholder's Attorneys-in-fact (the "ATTORNEYS-IN-FACT" or either
of them the "Attorney-in-Fact") with authority to execute and deliver this
Agreement on behalf of such Selling Stockholder, to
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<PAGE> 14
determine the purchase price to be paid by the Underwriters to the Selling
Stockholders as provided herein, to authorize the delivery of the Shares to be
sold by such Selling Stockholder hereunder, and otherwise to act on behalf of
such Selling Stockholder in connection with the transactions contemplated by
this Agreement and the Custody Agreement.
Each of the Selling Stockholders specifically agrees that the Shares
represented by the certificates or the irrevocable Stock Option exercise
notice, in each case held in custody for such Selling Stockholder under the
Custody Agreement, are subject to the interests of the Underwriters hereunder,
and that the arrangements made by such Selling Stockholder for such custody,
and the appointment by such Selling Stockholder of the Attorney-in-Fact by the
Power of Attorney, are to that extent irrevocable. Each of the Selling
Stockholders specifically agrees that the obligations of such Selling
Stockholder hereunder shall not be terminated by operation of law, whether by
the death or incapacity of any individual Selling Stockholder, or, in the case
of an estate or trust, by the death or incapacity of any executor or trustee or
the termination of such estate or trust, or in the case of a partnership or
corporation, by the dissolution of such partnership or corporation, or by the
occurrence of any other event. If any individual Selling Stockholder or any
such executor or trustee should die or become incapacitated, or if any such
estate or trust should be terminated, or if any such partnership or corporation
should be dissolved, or if any other such event should occur, before the
delivery of the Shares hereunder, certificates representing such Shares shall
be delivered by or on behalf of such Selling Stockholder in accordance with the
terms and conditions of this Agreement and the Custody Agreement, and actions
taken by the Attorney-in-Fact pursuant to the Powers of Attorney shall be as
valid as if such death, incapacity, termination, dissolution or other event had
not occurred, regardless of whether or not the Custodian, the Attorney-in-Fact,
or any of them, shall have received notice of such death, incapacity,
termination, dissolution or other event.
5. (a) The Company covenants and agrees with each of the several
Underwriters as follows:
(i) to file the final Prospectus with the Commission within
the time periods specified by Rule 424(b) and Rule 430A under the
Securities Act and to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of the Prospectus and for so
long as the delivery of a prospectus is required in connection with
the offering or sale of the Shares; and to furnish copies of the
Prospectus to the Underwriters in New York City prior to 10:00 a.m.,
New York City time, on the Business Day next succeeding the date of
this Agreement in such quantities as the Representatives may
reasonably request;
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(ii) to deliver if requested by the Representatives, at the
expense of the Company, to the Representatives, five signed copies of
the Registration Statement (as originally filed) and each amendment
thereto, in each case including exhibits and documents incorporated by
reference therein, and to each other Underwriter a conformed copy of
the Registration Statement (as originally filed) and each amendment
thereto, in each case without exhibits but including the documents
incorporated by reference therein and, during the period mentioned in
Section 5(a)(v) below, to each of the Underwriters as many copies of
the Prospectus (including all amendments and supplements thereto) and
documents incorporated by reference therein as the Representatives may
reasonably request;
(iii) before filing any amendment or supplement to the
Registration Statement or the Prospectus, whether before or after the
time the Registration Statement becomes effective, to furnish to the
Representatives a copy of the proposed amendment or supplement for
review and not to file any such proposed amendment or supplement to
which the Representatives reasonably object;
(iv) to advise the Representatives promptly, and to confirm
such advice in writing (A) when the Registration Statement has become
effective, (B) when any amendment to the Registration Statement has
been filed or becomes effective, (C) when any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representatives with copies thereof, (D) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for any additional
information, (E) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of any
order preventing or suspending the use of any preliminary prospectus
or the Prospectus or the initiation or threatening of any proceeding
for that purpose, (F) of the occurrence of any event, within the
period referenced in Section 5(a)(v) below, as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, and (G) of the receipt by the Company of any notification
with respect to any suspension of the qualification of the Shares for
offer and sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and to use its best efforts to
prevent the issuance of any such stop order, or of any order
preventing or suspending the use of any preliminary prospectus or the
Prospectus, or of any order suspending any
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<PAGE> 16
such qualification of the shares, or notification of any such order
thereof and, if issued, to obtain as soon as possible the withdrawal
thereof;
(v) if, during such period of time after the first date of
the public offering of the Shares as in the opinion of counsel for the
Underwriters a prospectus relating to the Shares is required by law to
be delivered in connection with sales by the Underwriters or any
dealer, any event shall occur as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements
therein, in light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Prospectus to comply with law, forthwith to
prepare and furnish, at the expense of the Company, to the
Underwriters and to the dealers (whose names and addresses the
Representatives will furnish to the Company) to which Shares may have
been sold by the Representatives on behalf of the Underwriters and to
any other dealers upon request, such amendments or supplements to the
Prospectus as may be necessary so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus will comply with law;
(vi) to endeavor to qualify the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and to continue such
qualification in effect so long as reasonably required for
distribution of the Shares; provided that the Company shall not be
required to file a general consent to service of process in any
jurisdiction;
(vii) to make generally available to its security holders and
to the Representatives as soon as practicable an earnings statement
covering a period of at least twelve months beginning with the first
fiscal quarter of the Company occurring after the effective date of
the Registration Statement, which shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission
promulgated thereunder;
(viii) for a period of three years, to furnish to the
Representatives copies of all reports or other communications
(financial or other) furnished to holders of the Shares, and copies of
any reports and financial statements furnished to or filed with the
Commission or any national securities exchange;
(ix) for a period of 90 days after the date of the initial
public offering of the Shares not to (A) offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any
option, right or warrant to
16
<PAGE> 17
purchase or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or (B) enter into any
swap or other agreement that transfers, in whole or in part, any of
the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (A) or (B) above is to be
settled by delivery of Common Stock or such other securities, in cash
or otherwise without the prior written consent of the Underwriters,
other than the Shares to be sold by the Company hereunder and any
shares of Common Stock of the Company issued upon the exercise of
options granted under existing employee stock option plans;
(x) to use the net proceeds received by the Company from the
sale of the Shares by the Company pursuant to this Agreement in the
manner specified in the Prospectus under caption "Use of Proceeds";
(xi) to use its best efforts to list for quotation the Shares
on the National Association of Securities Dealers Automated Quotations
National Market (the "NASDAQ NATIONAL MARKET");
(xii) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all costs and expenses incident to the performance of
its obligations hereunder, including without limiting the generality
of the foregoing, all costs and expenses (A) incident to the
preparation, reregistration, transfer, execution and delivery of the
Shares, (B) incident to the preparation, printing and filing under the
Securities Act of the Registration Statement, the Prospectus and any
preliminary prospectus (including in each case all exhibits,
amendments and supplements thereto), (C) incurred in connection with
the registration or qualification of the Shares under the laws of such
jurisdictions as the Representatives may designate (including fees of
counsel for the Underwriters and its disbursements), (D) in connection
with the listing of the Shares on the Nasdaq National Market, (E)
related to the filing with, and clearance of the offering by, the
National Association of Securities Dealers, Inc., (F) in connection
with the printing (including word processing and duplication costs)
and delivery of this Agreement, the Preliminary and Supplemental Blue
Sky Memoranda and the furnishing to the Underwriters and dealers of
copies of the Registration Statement and the Prospectus, including
mailing and shipping, as herein provided, (G) any expenses incurred by
the Company in connection with a "road show" presentation to potential
investors, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations,
travel and lodging expenses of the representatives and officers of the
Company
17
<PAGE> 18
and any such consultants, and the cost of any aircraft chartered in
connection with the road show, (H) the cost of preparing stock
certificates and (I) the cost and charges of any transfer agent and
any registrar.
(b) Each of the Selling Stockholders covenants and agrees with each of
the several Underwriters that each Selling Stockholder will do or perform or
cause to be done or performed all things required to be done or performed by
each such Selling Stockholder on or prior to the Closing Date or the Additional
Closing Date, as the case may be, to satisfy all conditions precedent to the
delivery of the Shares pursuant to this Agreement.
6. The several obligations of the Underwriters hereunder to purchase
the Shares on the Closing Date or the Additional Closing Date, as the case may
be, are subject to the performance by the Company and each of the Selling
Stockholders of their respective obligations hereunder and to the following
additional conditions:
(a) the Registration Statement shall have become effective
(or if a post-effective amendment is required to be filed under the
Securities Act, such post-effective amendment shall have become
effective) not later than 5:00 P.M., New York City time, on the date
hereof; and no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment shall be in
effect, and no proceedings for such purpose shall be pending before or
threatened by the Commission; the Prospectus shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and regulations under
the Securities Act and in accordance with Section 5(a)(i) hereof; and
all requests for additional information shall have been complied with
to the satisfaction of the Representatives;
(b) the respective representations and warranties of the
Company and the Selling Stockholders contained herein are true and
correct on and as of the Closing Date or the Additional Closing Date,
as the case may be, as if made on and as of the Closing Date or the
Additional Closing Date, as the case may be, and each of the Company
and the Selling Stockholders shall have complied with all agreements
and all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date or the Additional Closing Date, as the
case may be;
(c) subsequent to the execution and delivery of this
Agreement and prior to the Closing Date or the Additional Closing
Date, as the case may be, there shall not have occurred any
downgrading, nor shall any notice have been given of (i) any
downgrading, (ii) any intended or potential downgrading or (iii) any
review or possible change that does not indicate an improvement, in
the rating accorded any securities of or
18
<PAGE> 19
guaranteed by the Company by any "nationally recognized statistical
rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(d) there shall not have been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries or any
Material Adverse Change, otherwise than as set forth or contemplated
in the Prospectus (as it stood at the time of execution and delivery
of this Agreement), the effect of which in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares on the Closing Date
or the Additional Closing Date, as the case may be, on the terms and
in the manner contemplated in the Prospectus (as it stood at the time
of execution and delivery of this Agreement); and neither the Company
nor any of its subsidiaries has sustained since the date of the latest
audited financial statements included or incorporated by reference in
the Prospectus (as it stood at the time of execution and delivery of
this Agreement) any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated
in the Prospectus (as it stood at the time of execution and delivery
of this Agreement);
(e) the Representatives shall have received on and as of the
Closing Date or the Additional Closing Date, as the case may be, (i) a
certificate of Phillip G. Norton, President and Chief Executive
Officer and Steven J. Mencarini, Chief Financial Officer, satisfactory
to the Representatives to the effect set forth in Sections 6(a), 6(b)
and 6(c) (with respect to the respective representations, warranties,
agreements and conditions of the Company) and to the further effect
that there has not occurred any Material Adverse Change, or any
development involving a prospective Material Adverse Change, from that
set forth or contemplated in the Registration Statement, (ii) a
certificate of Phillip G. Norton, on behalf of the Management Selling
Stockholders, satisfactory to the Underwriters to the effect set forth
in Section 6(b) (with respect to the respective representations,
warranties, agreements and conditions of the Management Selling
Stockholders), (iii) a certificate of ______, an executive officer of
TC Equity Partners, LLC, the general partner of Thayer Equity
Investors III, LP, the managing member of TC Plus, LLC, satisfactory
to the Underwriters to the effect set forth in Section 6(b) (with
respect to the respective representations, warranties, agreements and
conditions) of TC Plus, LLC and (iv) a certificate of Steven J.
Goldstein, on behalf of Centura Banks, Inc., satisfactory to the
Underwriters to the effect set forth in Section 6(b) (with respect to
the respective
19
<PAGE> 20
representations, warranties, agreements and conditions) of Centura
Banks, Inc.);
(f) Alston & Bird LLP, counsel for the Company, shall have
furnished to the Representatives their written opinion, dated the
Closing Date or the Additional Closing Date, as the case may be, in
form and substance satisfactory to the Representatives, to the effect
that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of Delaware, with power and authority (corporate and
other) to own its properties and conduct its business as
described in the Prospectus;
(ii) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as
to require such qualification, other than where the failure
to be so qualified or in good standing would not have a
Material Adverse Effect;
(iii) each of the Company's subsidiaries has been
duly incorporated and is validly existing as a corporation
under the laws of its jurisdiction of incorporation with
power and authority (corporate and other) to own its
properties and conduct its business as described in the
Prospectus and has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as
to require such qualification, other than where the failure
to be so qualified and in good standing would not have a
Material Adverse Effect; and all of the outstanding shares of
capital stock of each subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable, and
are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims;
(iv) to the best of such counsel's knowledge, there
are no legal or governmental investigations, actions, suits
or proceedings pending or threatened against or affecting the
Company or any of its subsidiaries or any of their respective
properties or to which the Company or any of its subsidiaries
is or may be a party or to which any property of the Company
or its subsidiaries is or may be the subject which, if
determined adversely to the Company or any of its
subsidiaries, could individually or in the aggregate have, or
20
<PAGE> 21
reasonably be expected to have, a Material Adverse Effect;
and to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others; and such counsel does
not know of any statutes, regulations, contracts or other
documents that are required to be described in the
Registration Statement or Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required;
(v) this Agreement has been duly authorized,
executed and delivered by the Company;
(vi) the authorized capital stock of the Company
conforms as to legal matters to the description thereof
contained in the Prospectus;
(vii) the shares of capital stock of the Company
outstanding prior to the issuance of the Shares to be sold by
the Company hereunder (including the shares issued upon the
exercise of the Warrant and the Shares to be sold by the
Selling Stockholders) have been duly authorized and are
validly issued, fully paid and non-assessable (assuming, with
respect to Shares being issued upon the exercise of the Stock
Options, that payment of the exercise price therefor is made
to the Company as provided in the Stock Option Agreement and
the Custody Agreement);
(viii) the Shares to be issued and sold by the Company
hereunder have been duly authorized, and when delivered to
and paid for by the Underwriters in accordance with the terms
of this Agreement, will be validly issued, fully paid and
non-assessable and the issuance of the Shares is not subject
to any preemptive or similar rights;
(ix) the statements in the Prospectus under the
heading "Risk Factors - We have entered into agreements with
a major stockholder that permits it to appoint certain
members of our board of directors," "Business-Intellectual
Property", and "Certain Transactions," incorporated by
reference from Item 3 of Part 1 of the Company's Annual
Report on Form 10-K for the year ended March 31, 1999, in and
in the Registration Statement in Item 15, insofar as such
statements constitute a summary of the terms of the Stock,
legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to
such terms, legal matters, documents or proceedings;
21
<PAGE> 22
(x) the issue and sale of the Shares to be sold by
the Company, the issuance by the Company of the shares issued
upon the exercise of the Warrant, the issuance by the Company
of the Shares to be issued upon the exercise of the Stock
Options and the performance by the Company of its obligations
under this Agreement and the consummation of the transactions
contemplated herein will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such
counsel to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will any
such action result in any violation of the provisions of the
Certificate of Incorporation or the By-Laws of the Company
or, to such counsel's knowledge, any applicable law or
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the
Company, its subsidiaries or any of their respective
properties;
(xi) no consent, approval, authorization, order,
license, registration or qualification of or with any court
or governmental agency or body is required for the issuance
by the Company of the Shares to be sold by it hereunder, the
issuance by the Company of the shares issued upon the
exercise of the Warrant, the issuance by the Company of the
Shares to be issued upon the exercise of the Stock Options or
the consummation by the Company of the other transactions
contemplated by this Agreement, except such consents,
approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act
and as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the
Shares by the Underwriters;
(xii) the Company is not and, after giving effect to
the offering and sale of the Shares, will not be an
"investment company", as such term is defined in the
Investment Company Act;
(xiii) except as described in the Prospectus, to the
best of such counsel's knowledge, there are no contracts,
agreements or understandings between the Company and any
person granting such person the right to require the Company
to file a registration statement under the Securities Act
with respect to any securities of the Company; and
22
<PAGE> 23
(xiv) the documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto
made by the Company prior to the Closing Date or the
Additional Closing Date, as the case may be, (other than the
financial statements and related schedules therein, as to
which such counsel need express no opinion), when they were
filed with the Commission complied as to form in all material
respects with the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent certified public accountants of the Company,
and representatives of the Underwriters and their counsel, during which the
contents of the Registration Statement and the Prospectus and related matters
were discussed, and, although they have not independently verified (except as
specified in paragraph (ix) above) and are not passing upon and are assuming no
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, on the basis of the
foregoing, no facts have come to their attention which lead them to believe
that, the Registration Statement on its effective date contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date or the Closing Date, contained or contains
an untrue statement of material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
it being understood that they express no view with respect to the financial
statements and related notes thereto and the other financial or statistical
data included or incorporated by reference therein.
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
the State of Georgia and the General Corporation Law of the State of Delaware,
to the extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and substance
reasonably satisfactory to Underwriters' counsel) of other counsel reasonably
acceptable to the Underwriters' counsel, familiar with the applicable laws and
(B) as to matters of fact, to the extent such counsel deems proper, on
certificates of responsible officers of the Company and certificates or other
written statements of officials of jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company. The opinion
of such counsel for the Company shall state that the opinion of any such other
counsel upon which they relied is in form satisfactory to such counsel and, in
such counsel's opinion, the Underwriters and they are justified in relying
thereon.
23
<PAGE> 24
The opinion of Alston & Bird LLP described above shall be rendered to
the Underwriters at the request of the Company and shall so state therein.
(g) Kirkland & Ellis, counsel for TC Plus, LLC, shall have
furnished to the Underwriters their written opinion, dated the Closing
Date or Additional Closing Date, as the case may be, in form and
substance satisfactory to the Underwriters, to the effect that:
(i) this Agreement has been duly authorized,
executed and delivered on behalf of TC Plus, LLC;
(ii) the sale of the Shares to the Underwriters by
TC Plus, LLC pursuant to this Agreement, the compliance by TC
Plus, LLC with the other provisions of this Agreement and the
consummation by TC Plus, LLC of the other transactions
contemplated in this Agreement do not (i) result in any
violation of the TC Plus, LLC limited liability company
agreement or other organizational documents, as the case may
be, (ii) result in any violation of any order, judgment or
decree known to us (after inquiry of TC Plus, LLC) of any
court or government agency or body having jurisdiction over
TC Plus, LLC or the property of TC Plus, LLC which order,
judgment or decree is specifically applicable to TC Plus,
LLC, (iii) result in any breach or violation of any agreement
or instrument known to us (after inquiry of TC Plus, LLC) to
which TC Plus, LLC is a party or by which TC Plus, LLC is
bound, or to which any of the property or assets of TC Plus,
LLC is subject or (iv) result in any violation of any
statute, law, rule or regulation known to us of any
governmental agency or body thereof having jurisdiction over
TC Plus, LLC or the property of TC Plus, LLC (except that we
express no opinion with respect to any federal or state
securities statute, law, rule or regulation) in each case
other than such violations, which individually or in the
aggregate, would not affect the validity, performance or
consummation of the transactions contemplated by the
Underwriting Agreement;
(iii) no consent, approval, authorization or order of
any Federal or New York governmental agency or body or, to
our knowledge, any court is required for the consummation of
the transactions contemplated by the Underwriting Agreement
in connection with the Shares to be sold by TC Plus, LLC,
except such as have been obtained, the registration under the
Act and the Exchange Act and such as may be required under
state securities or blue Sky laws or by or with the National
Association of Securities Dealers, Inc. in connection with
the purchase and distribution of
24
<PAGE> 25
such Shares by the Underwriters, as to which we express no
opinion;
(iv) each of the Power of Attorney and the Custody
Agreement has been duly authorized, executed and delivered by
TC Plus, LLC and is a valid and binding obligation of TC
Plus, LLC, enforceable against it in accordance with its
terms;
(v) upon (i) the delivery to The Depository Trust
Company ("DTC") or its nominee of the Shares to be sold by TC
Plus, LLC under the Underwriting Agreement (such Shares, the
"TC Plus Shares") registered in the name designated by DTC
(including, without limitation, Cede & Co.), and (ii) the
crediting of the TC Plus Shares to the securities accounts of
the several Underwriters with DTC, DTC will be a "protected
purchaser" of the TC Plus Shares (as defined in Section 8-303
of the Uniform Commercial Code as adopted by the State of New
York (the "NYUCC")) and will acquire its interest in the TC
Plus Shares free of any adverse claim (assuming DTC is
without notice of any adverse claim with respect to the TC
Plus Shares);
(vi) upon payment of the purchase price for the TC
Plus Shares and the crediting of the TC Plus Shares to the
securities accounts of the several Underwriters with DTC,
each of the Underwriters will acquire a valid security
entitlement (within the meaning of Section 8-501 of the
NYUCC) in respect of the Shares to be purchased by it, and no
action (whether framed in conversion, replevin, constructive
trust, equitable lien or other theory) based on an adverse
claim may be asserted against the Underwriters with respect
to such security entitlement (assuming that the Underwriters
are without notice of the adverse claim).
In rendering such opinions, such counsel may rely as
to matters involving the application of laws other than the
laws of the United States and the state of New York, and the
General Corporation Law of the State of Delaware, to the
extent such counsel deems proper and to the extent specified
in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to the
Underwriters' counsel, familiar with the applicable laws. The
opinion of such counsel for TC Plus, LLC shall state that the
opinion of any such other counsel is in form satisfactory to
such counsel and, in such counsel's opinion, the Underwriters
and they are justified in relying thereon.
25
<PAGE> 26
(h) Thacher Profitt & Wood, counsel for Centura Banks, Inc.,
shall have furnished to the Underwriters their written opinion, dated
the Closing Date or Additional Closing Date, as the case may be, in
form and substance satisfactory to the Underwriters, to the effect
that:
(i) this Agreement has been duly authorized,
executed and delivered by or on behalf of Centura Banks,
Inc.;
(ii) a Power of Attorney and a Custody Agreement
have been duly authorized, executed and delivered by Centura
Banks, Inc. and constitute valid and binding agreements of
Centura Banks, Inc. in accordance with their terms;
(iii) Centura Banks, Inc. is the record, beneficial
and lawful owner of all of the Shares to be sold by it;
(iv) upon payment pursuant to this Agreement for the
Shares to be sold by Centura Banks, Inc. pursuant hereto,
delivery of such Shares, as directed by the Underwriters, to
Cede or such other nominee as may be designated by DTC,
registration of such Shares in the name of Cede or such other
nominee as may be designated by DTC on the Company's share
registry in accordance with the Company's certificate of
incorporation, bylaws and applicable law and an indication
from DTC by book entry that such Shares have been credited to
"securities accounts" (as defined in Section 8-501 of the
UCC) of the respective Underwriters with DTC (assuming that
neither DTC nor any such Underwriter has notice of any
adverse claim (as such phrase is defined in Section 8-105 of
the UCC) to such Shares): (A) DTC shall be a "protected
purchaser" of such Shares within the meaning of Section 8-303
of the UCC; and (B) under Section 8-501 of the UCC, each
Underwriter will acquire a valid "security entitlement" (as
defined in Section 8-102 of the UCC) to the Shares being so
purchased by or on behalf of such Underwriter, and, to the
extent governed by the UCC, no action based on any "adverse
claim" (as defined in Section 8-102 of the UCC) to such
Shares (or security entitlement with respect thereto) may
properly be asserted against such Underwriter with respect to
such security entitlement; it being understood that for the
purpose of this opinion, such counsel has assumed without
independent verification, that the UCC is the law applicable
to the sale of the Shares and that when such payment,
delivery, registration and crediting occur, (x) Cede is not a
"securities intermediary" (as defined in Section 8-102 of the
UCC), (y) registration of such Shares in the name of Cede or
another nominee designated by DTC is effective to register
such Shares in
26
<PAGE> 27
the name of DTC for purposes of Section 8-106 (b)(2) of the
UCC and (z) DTC is a "clearing corporation" (as defined in
Section 8-102 of the UCC); and
(v) the sale of the Shares and the execution and
delivery by Centura Banks, Inc. of, and the performance by
Centura Banks, Inc. of its obligations under, this Agreement,
and the consummation of the transactions contemplated herein,
(i) have been duly authorized on the part of Centura Banks,
Inc., and (ii) to the best of such counsel's knowledge, will
not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which Centura Banks, Inc.
is a party or by which Centura Banks, Inc. is bound or to
which any of the property or assets of Centura Banks, Inc. is
subject, nor will any such action result in any violation of
the provisions of the Certificate of Incorporation or the
By-Laws of Centura Banks, Inc. or to the best of such
counsel's knowledge, any applicable law or statute or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over Centura Banks, Inc. or any
of its properties; and no consent, approval, authorization,
order, registration or qualification of or with any such
court or governmental agency or body is required for the sale
of the Shares or the consummation by Centura Banks, Inc. of
the transactions contemplated by this Agreement, except such
consents, approvals, authorizations, registrations or
qualifications as have been obtained under the Securities Act
and as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the
Shares by the Underwriters.
In rendering such opinions, such counsel may rely as
to matters involving the application of laws other than the
laws of the United States and the state of North Carolina and
the General Corporation Law of the State of Delaware, to the
extent such counsel deems proper and to the extent specified
in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to the
Underwriters' counsel, familiar with the applicable laws. The
opinion of such counsel for Centura Banks, Inc. shall state
that the opinion of any such other counsel is in form
satisfactory to such counsel and, in such counsel's opinion,
the Underwriters and they are justified in relying thereon.
(i) Alston & Bird LLP, counsel for the Management Selling
Stockholders, shall have furnished to the Underwriters their written
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<PAGE> 28
opinion, dated the Closing Date or Additional Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters,
to the effect that:
(i) this Agreement has been duly authorized,
executed and delivered by or on behalf of each of the
Management Selling Stockholders;
(ii) a Power of Attorney and a Custody Agreement
have been duly authorized, executed and delivered by each
Management Selling Stockholder and constitute valid and
binding agreements of each Selling Stockholder in accordance
with their terms;
(iii) each Management Selling Stockholder is the
record, beneficial and lawful owner of all of the Shares to
be sold by such Management Selling Stockholder;
(iv) upon payment pursuant to this Agreement for the
Shares to be sold by the Management Selling Stockholders
pursuant hereto, delivery of such Shares, as directed by the
Underwriters, to Cede or such other nominee as may be
designated by DTC, registration of such Shares in the name of
Cede or such other nominee as may be designated by DTC on the
Company's share registry in accordance with the Company's
certificate of incorporation, bylaws and applicable law and
an indication from DTC by book entry that such Shares have
been credited to "securities accounts" (as defined in Section
8-501 of the UCC) of the respective Underwriters with DTC
(assuming that neither DTC nor any such Underwriter has
notice of any adverse claim (as such phrase is defined in
Section 8-105 of the UCC) to such Shares): (A) DTC shall be a
"protected purchaser" of such Shares within the meaning of
Section 8-303 of the UCC; and (B) under Section 8-501 of the
UCC, each Underwriter will acquire a valid "security
entitlement" (as defined in Section 8-102 of the UCC) to the
Shares being so purchased by or on behalf of such
Underwriter, and, to the extent governed by the UCC, no
action based on any "adverse claim" (as defined in Section
8-102 of the UCC) to such Shares (or security entitlement
with respect thereto) may properly be asserted against such
Underwriter with respect to such security entitlement; it
being understood that for the purpose of this opinion, such
counsel has assumed without independent verification, that
the UCC is the law applicable to the sale of the Shares and
that when such payment, delivery, registration and crediting
occur, (x) Cede is not a "securities intermediary" (as
defined in Section 8-102 of the UCC), (y) registration of
such Shares in the name of Cede or
28
<PAGE> 29
another nominee designated by DTC is effective to register
such Shares in the name of DTC for purposes of Section 8-106
(b)(2) of the UCC and (z) DTC is a "clearing corporation" (as
defined in Section 8-102 of the UCC); and
(v) the sale of the Shares and the execution and
delivery by the Management Selling Shareholder of, and the
performance by the Management Selling Shareholder of its
obligations under, this Agreement, and the consummation of
the transactions contemplated herein, (i) have been duly
authorized on the part of each of the Management Selling
Stockholders, and (ii) to the best of such counsel's
knowledge, will not conflict with or result in a breach of
any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement
or other material agreement or instrument to which any
Management Selling Stockholder is a party or by which any
Management Selling Stockholder is bound or to which any of
the property or assets of any Management Selling Stockholder
is subject, or, to the best of such counsel's knowledge, any
applicable law or statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction
over such Selling Stockholder or any of its properties; and
no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental
agency or body is required for the sale of the Shares or the
consummation by the Management Selling Stockholders of the
transactions contemplated by this Agreement, except such
consents, approvals, authorizations, registrations or
qualifications as have been obtained under the Securities Act
and as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the
Shares by the Underwriters.
In rendering such opinions, such counsel may rely as
to matters involving the application of laws other than the
laws of the United States and the state of Georgia and the
General Corporation Law of the State of Delaware, to the
extent such counsel deems proper and to the extent specified
in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to Underwriters'
counsel) of other counsel reasonably acceptable to the
Underwriters'
29
<PAGE> 30
counsel, familiar with the applicable laws. The opinion of
such counsel for the Management Selling Stockholders shall
state that the opinion of any such other counsel is in form
satisfactory to such counsel and, in such counsel's opinion,
the Underwriters and they are justified in relying thereon.
(j) on the effective date of the Registration Statement and
the effective date of the most recently filed post-effective amendment
to the Registration Statement and also on the Closing Date or
Additional Closing Date, as the case may be, Deloitte and Touche LLP
shall have furnished to you letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you,
containing statements and information of the type customarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in
the Registration Statement and the Prospectus;
(k) the Representatives shall have received on and as of the
Closing Date or Additional Closing Date, as the case may be, an
opinion of Davis Polk & Wardwell, counsel to the Underwriters, with
respect to the Registration Statement, the Prospectus and other
related matters as the Underwriters may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(l) the Shares to be delivered on the Closing Date or
Additional Closing Date, as the case may be, shall have been approved
for listing on the Nasdaq National Market, subject to official notice
of issuance;
(m) on or prior to the Closing Date or Additional Closing
Date, as the case may be, the Company and the Selling Stockholders
shall have furnished to the Representatives such further certificates
and documents as the Representatives shall reasonably request;
(n) the "lock-up" agreements, each substantially in the form
of Exhibit A-1 hereto, between you and the parties listed on Exhibit
A-2 hereto relating to sales and certain other dispositions of shares
of Stock or certain other securities, delivered to you on or before
the date hereof, shall be in full force and effect on the Closing Date
or Additional Closing Date, as the case may be; and
30
<PAGE> 31
(o) each of the Amended and Restated Stockholders Agreement,
the Warrant Agreement and the Modified Stock Purchase Agreement shall
be in effect and none of the provisions of any such agreements shall
have been amended or waived (except with the Underwriters' consent) as
of the Closing Date.
7. The Company agrees to indemnify and hold harmless each
Underwriter, each affiliate of any Underwriter which assists such Underwriter
in the distribution of the Shares and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, the legal fees and
other expenses incurred in connection with any suit, action or proceeding or
any claim asserted) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information relating to any Underwriter or
any Selling Stockholder, furnished to the Company in writing by such
Underwriter through the Representatives or by such Selling Stockholder
expressly for use therein.
Each of the Selling Stockholders severally in proportion to the number
of Shares to be sold by such Selling Stockholder hereunder agrees to indemnify
and hold harmless each Underwriter, each affiliate of any Underwriter which
assists such Underwriter in the distribution of the Shares and each person, if
any, who controls any Underwriter within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages and liabilities (including, without limitation, the
legal fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted) caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectus (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only with reference to information relating to any Selling
Stockholder furnished in writing by or on behalf of such Selling Stockholder
for use in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any preliminary prospectus, provided, that the aggregate
amount of all indemnification reimbursement payable by any Selling Stockholder
pursuant to this Agreement shall in no case exceed the net proceeds to such
Selling Stockholder from the sale of Shares.
31
<PAGE> 32
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person who controls the Company within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act
and each of the Selling Stockholders to the same extent as the foregoing
indemnity from the Company and the Selling Stockholders to each Underwriter,
but only with reference to information relating to such Underwriter furnished
to the Company in writing by such Underwriter through the Representatives
expressly for use in the Registration Statement, the Prospectus, any amendment
or supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to the
preceding paragraphs of this Section 7, such person (the "INDEMNIFIED PERSON")
shall promptly notify the person or persons against whom such indemnity may be
sought (each an "INDEMNIFYING PERSON") in writing, and such Indemnifying
Persons, upon request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others the Indemnifying Persons may designate in such proceeding
and shall pay the fees and expenses of such counsel related to such proceeding.
In any such proceeding, any Indemnified Person shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person and not the Indemnifying Persons unless (i)
the Indemnifying Persons and the Indemnified Person shall have mutually agreed
to the contrary, (ii) the Indemnifying Persons has failed within a reasonable
time to retain counsel reasonably satisfactory to the Indemnified Person or
(iii) the named parties in any such proceeding (including any impleaded
parties) include both an Indemnifying Person and the Indemnified Person and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood that
no Indemnifying Person shall, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for the Underwriters, each affiliate
of any Underwriter which assists such Underwriter in the distribution of the
Shares and such control persons of Underwriters shall be designated in writing
by J.P. Morgan Securities Inc. and any such separate firm for the Company, its
directors, its officers who sign the Registration Statement and such control
persons of the Company shall be designated in writing by the Company and any
such separate firm for the Selling Stockholders shall be designated in writing
as mutually agreed between the Attorney-in-Fact and an executive officer of TC
Equity Partners, LLC, the general partner of Thayer Equity Investors III, LP,
the managing member
32
<PAGE> 33
of TC Plus, LLC. No Indemnifying Person shall be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, each Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested
an Indemnifying Person to reimburse the Indemnified Person for fees and
expenses of counsel as contemplated by the second and third sentences of this
paragraph, such Indemnifying Person agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not
have reimbursed the Indemnified Person in accordance with such request prior to
the date of such settlement. No Indemnifying Person shall, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject
matter of such proceeding.
If the indemnification provided for in the first three paragraphs of
this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities (A) as between the Company and the Underwriters (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and (B) as
between (x) the Company and the Selling Shareholders, or (y) the Selling
Shareholders and the Underwriters, in such proportion as is appropriate to
reflect the relative fault of the indemnifying party or parties on the one hand
and the indemnified party or parties on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other hand shall be deemed to be in the same respective proportions as
the net proceeds from the offering (before deducting expenses) received by the
Company (as if, for purposes of this paragraph, the Company had received all of
the proceeds of such offering) and the total underwriting discounts
33
<PAGE> 34
and the commissions received by the Underwriters, in each case as set forth in
the table on the cover of the Prospectus, bear to the aggregate public offering
price of the Shares. The relative fault of the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company and the
Selling Stockholders or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the Selling Stockholders or the
Underwriters were treated as one entity for such purposes) or by any other
method of allocation that does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Person in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 7, in no event shall an Underwriter be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and no Selling Stockholder shall be required to
contribute any amount in excess of the net proceeds received by such Selling
Stockholder from the offering of Shares. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 7 are several in proportion to the respective number
of Shares set forth opposite their names in Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company and the Selling
Stockholders set forth in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any other person
34
<PAGE> 35
controlling the Company or the Selling Stockholders and (iii) acceptance of and
payment for any of the Shares.
8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Representatives, by notice given
to the Company and the Selling Stockholders, if after the execution and
delivery of this Agreement and prior to the Closing Date (or, in the case of
the Option Shares, prior to the Additional Closing Date) (i) trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange or the National Association of Securities
Dealers, Inc., (ii) trading of any securities of or guaranteed by the Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York State authorities, or (iv)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in the judgment of
the Representatives, is material and adverse and which, in the judgment of the
Representatives, makes it impracticable to market the Shares being delivered at
the Closing Date or the Additional Closing Date, as the case may be, on the
terms and in the manner contemplated in the Prospectus.
9. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date or the Additional Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of Shares to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the number of Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of Underwritten Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as the
Representatives may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Shares that any Underwriter
has agreed to purchase pursuant to Section 1 be increased pursuant to this
Section 9 by an amount in excess of one-tenth of such number of Shares without
the written consent of such Underwriter. If on the Closing Date or the
Additional Closing Date, as the case may be, any Underwriter or Underwriters
shall fail or refuse to purchase Shares which it or they have agreed to
purchase hereunder on such date, and the aggregate number of Shares with
respect to which such default occurs is more than one-tenth of the aggregate
number of Shares to
35
<PAGE> 36
be purchased on such date, and arrangements satisfactory to the
Representatives, the Company and the Selling Stockholders for the purchase of
such Shares are not made within 36 hours after such default, this Agreement (or
the obligations of the several Underwriters to purchase the Option Shares, as
the case may be) shall terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholder. In any such
case either you or the Company and the Selling Stockholders shall have the
right to postpone the Closing Date (or, in the case of the Option Shares, the
Additional Closing Date), but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company or the
Selling Stockholders to comply with the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company shall be unable
to perform its obligations under this Agreement or any condition of the
Underwriters' obligations cannot be fulfilled, the Company agrees to reimburse
the Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and expenses of its counsel) reasonably incurred by the Underwriter in
connection with this Agreement or the offering contemplated hereunder.
11. This Agreement shall inure to the benefit of and be binding upon
the Company, the Selling Stockholders and the Underwriters, each affiliate of
any Underwriter which assists such Underwriter in the distribution of the
Shares, any controlling persons referred to herein and their respective
successors and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person, firm or corporation
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. No purchaser of Shares from any
Underwriter shall be deemed to be a successor by reason merely of such
purchase.
12. Any action by the Underwriters hereunder may be taken by J.P.
Morgan Securities Inc. alone on behalf of the Underwriters, and any such action
taken by J.P. Morgan Securities Inc. alone shall be binding upon the
Underwriters. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
given to J.P. Morgan Securities Inc., 60 Wall Street, New York, New York 10260
(telefax:______); Attention: Syndicate Department. Notices to the Company shall
be given to it at ePlus inc., 400 Herndon Parkway, Herndon, VA, (telefax:
703-834-5718); Attention: Kleyton L. Parkhurst. Notices to the Selling
Stockholders shall be
36
<PAGE> 37
given to the Attorneys-in-Fact at ePlus inc., 400 Herndon Parkway, Herndon, VA,
(telefax: 703-834-5718); Attention: Kleyton L. Parkhurst and Phillip G. Norton.
13. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS
OF LAWS PROVISIONS THEREOF.
37
<PAGE> 38
If the foregoing is in accordance with your understanding, please sign
and return four counterparts hereof.
Very truly yours,
ePlus Inc.
By:
----------------------------
Name:
Title:
Selling Stockholders
By:
----------------------------
Name:
Title:
As Attorney-in-Fact acting on
behalf of each of the Selling
Stockholders named in
Schedule II and Schedule III
to this Agreement.
Accepted:_________, 2000
J.P. Morgan Securities, Inc.
First Union Securities, Inc.
Friedman, Billings, Ramsey & Co., Inc.
U.S. Bancorp Piper Jaffray Inc.
Acting severally on behalf of themselves
By: J.P. Morgan Securities Inc.
Actingon behalf of itself and the several
Underwriters listed in Schedule I
hereto.
By:
------------------------------------------------------------------------
Title:
38
<PAGE> 39
SCHEDULE I
------------ ----------------
UNDERWRITERS NUMBER OF SHARES
TO BE PURCHASED
J.P. Morgan Securities Inc...........................................
First Union Securities, Inc..........................................
Friedman, Billings, Ramsey & Co., Inc................................
U.S. Bancorp Piper Jaffray Inc.......................................
Total.......................................................
<PAGE> 40
SCHEDULE II
<TABLE>
<CAPTION>
- ----------------------------------- --------------- --------------
NUMBER OF
NON-MANAGEMENT SELLING STOCKHOLDERS UNDERWRITTEN NUMBER OF
SHARES OPTION SHARES
<S> <C> <C>
TC Plus, LLC......................................... 400,000 150,000
Centura Banks, Inc................................... 100,000 37,500
</TABLE>
<PAGE> 41
SCHEDULE III
<TABLE>
<CAPTION>
NUMBER OF
---------
MANAGEMENT SELLING STOCKHOLDERS OPTION SHARES
------------------------------- -------------
<S> <C>
Phillip G. Norton................................................... 116,015
Bruce M. and Elizabeth D. Bowen..................................... 46,485
Steven J Mencarini.................................................. 5,000
Kleyton L. Parkhurst................................................ 20,000
- --------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 42
EXHIBIT A-1
LOCK-UP AGREEMENT
February__, 2000
J.P. MORGAN SECURITIES INC.
FIRST UNION SECURITIES, INC.
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
U.S. BANCORP PIPER JAFFRAY INC.
c/o J.P. Morgan Securities Inc.
60 Wall Street
New York, NY 10260
Re: EPLUS INC. -- PUBLIC OFFERING
Ladies and Gentlemen:
The undersigned understands that you propose to enter into an
Underwriting Agreement (the "UNDERWRITING AGREEMENT") with ePlus inc., a
Delaware corporation (the "COMPANY") and the selling shareholders named
therein, providing for the public offering (the "PUBLIC OFFERING") by the
several underwriters named in the Underwriting Agreement (the "UNDERWRITERS"),
of shares (the "SHARES") of common stock, par value $0.01 per share, of the
Company (the "COMMON STOCK"). Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Underwriting Agreement.
In consideration of the Underwriters' agreement to purchase and make
the Public Offering of the Shares, and for other good and valuable
consideration receipt of which is hereby acknowledged, the undersigned hereby
agrees that, without the prior written consent of J.P. Morgan Securities Inc.,
on behalf of the Underwriters, the undersigned will not, during the period
commencing on the date hereof and ending 90 days after the date of the
prospectus relating to the Public Offering (the "PROSPECTUS"), (1) offer,
pledge, announce the intention to sell, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock (including
without limitation, Common Stock which may be deemed to be beneficially owned
by the undersigned in accordance with the rules and regulations
A-1-1
<PAGE> 43
of the Securities and Exchange Commission and securities which may be issued
upon exercise of a stock option or warrant) or (2) enter into any swap or other
agreement that transfers, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (1) or (2) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. In addition, the undersigned agrees
that, without the prior written consent of J.P. Morgan Securities Inc., on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the Prospectus, make any
demand for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
In furtherance of the foregoing, the Company, and any duly appointed
transfer agent for the registration or transfer of the securities described
herein, are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Letter Agreement.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into this Letter Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
The undersigned understands that, if the Underwriting Agreement does
not become effective, or if the Underwriting Agreement (other than the
provisions thereof which survive termination) shall terminate or be terminated
prior to payment for and delivery of the Common Stock to be sold thereunder,
the undersigned shall be released from all obligations under this Letter
Agreement.
The undersigned understands that the Underwriters are entering into
the Underwriting Agreement and proceeding with the Public Offering in reliance
upon this Letter Agreement.
This lock-up agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of laws principles thereof.
Very truly yours,
By:
-------------------------------
Name:
Title:
A-1-2
<PAGE> 44
Accepted as of the date first set forth above:
J.P. MORGAN SECURITIES INC.
FIRST UNION SECURITIES, INC.
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
U.S. BANCORP PIPER JAFFRAY INC.
By: J.P. MORGAN SECURITIES INC.
By:
---------------------------------------------------------------------------
Name:
Title:
A-1-3
<PAGE> 45
EXHIBIT A-2
Phillip G. Norton
J.A.P. Investment Group, L.P.
Bruce M. Bowen
Elizabeth D. Bowen
Bowen Holdings L.C.
Steven J. Mencarini
Kleyton L. Parkhurst
C. Thomas Faulders, III
Terrence O'Donnell
Carl J. Rickertsen
Dr. Paul G. Stern
Thayer Equity Investors III, L.P.
TC Plus, L.L.C.
Centura Banks, Inc.
